What Is a Commercial Portfolio Mortgage?
A commercial portfolio mortgage is a financial product that allows you to group two or more commercial properties under one lending agreement. Rather than managing separate mortgages for each asset, you have a single point of borrowing — simplifying both the administration and financial oversight of your investments.
This type of facility is designed for professional landlords, developers, or businesses with a minimum of two commercial properties, but it can be especially useful for those with larger or more diversified portfolios.
At a glance:
One mortgage agreement secured against multiple commercial properties.
Typically includes offices, shops, warehouses, industrial units, or mixed-use buildings.
Offers improved cash flow management and often reduced overall borrowing costs.
Some lenders may also consider semi-commercial properties (e.g. a ground-floor retail unit with residential flats above), depending on the income mix and intended use.
How Does It Work?
When applying for a commercial portfolio mortgage, the lender will assess the portfolio as a whole — rather than judging each property individually. This means they look at total rental income, the quality of your tenants, the location and condition of the assets, and your track record as an investor or landlord.
Because the properties act as cross-collateralised security (i.e., all properties secure the entire loan), lenders can often be more flexible in structuring the deal — especially if stronger properties can support those that are less established or tenanted.
Lender considerations typically include:
The combined market value and equity held in the portfolio.
Current and projected rental income, net of costs.
Covenants, lease terms, and tenant quality across the portfolio.
Your experience as a commercial investor and your credit profile.
Any existing borrowing, refinancing goals, or expansion plans.
This holistic approach gives you more flexibility than applying for individual mortgages, especially if your portfolio includes a mix of asset types or locations.
Loan Size and Loan-to-Value (LTV)
The amount you can borrow will vary depending on the strength of the portfolio and your income coverage ratio. Lenders are generally willing to offer between 65% and 75% LTV (Loan-to-Value), although in some cases — such as low-risk, fully let portfolios — higher leverage may be considered.
Key points to note:
LTV is calculated on the aggregate value of the properties.
Lenders may use either market value or investment value based on income.
Strong lease agreements and longer terms may support a higher loan amount.
Existing equity within the portfolio can be released to fund refurbishment, development, or new acquisitions.
If you're refinancing from multiple loans into a single facility, it's also an opportunity to reassess your repayment structure, access better terms, or reduce your monthly outgoings.
Interest Rates and Repayment Options
Commercial portfolio mortgages offer a range of repayment terms, tailored to your goals and financial strategy. Interest rates will depend on the size of the loan, the risk profile of the portfolio, and the stability of your rental income.
Available options include:
Fixed-rate terms – ideal for predictable budgeting and long-term planning.
Variable rates – may offer lower starting rates but come with market exposure.
Interest-only terms – useful for maximising short-term cash flow, particularly where the exit strategy includes refinancing or sale.
Capital and interest repayment – helps build equity and reduce debt over time.
Lenders usually offer terms from 5 to 25 years, with tailored structures for more complex portfolios.
Benefits of a Portfolio Approach
Using one mortgage to finance several commercial properties provides a number of strategic and operational advantages, especially for growing or actively managed portfolios.
Key benefits include:
Simplified management: One repayment, one lender relationship, and one point of contact.
Administrative efficiency: Lower cumulative legal and valuation fees compared to separate loans.
Flexibility to grow: Many lenders allow new properties to be added to the facility as your portfolio evolves.
Equity release: Unlock capital from your existing properties to fund refurbishments, acquisitions, or business growth.
Improved borrowing terms: Well-performing portfolios can give you access to better rates and higher lending thresholds.
Who Can Apply?
Commercial portfolio mortgages are available to both individual investors and limited companies (SPVs or trading entities), although corporate structures are often preferred due to tax and liability considerations.
To be eligible, most lenders will expect:
A minimum of two commercial properties in the portfolio (some may require more).
A proven track record in managing or investing in commercial property.
A strong credit profile, with minimal arrears or defaults.
Adequate rental income coverage (often 125%–145% of interest payments).
Personal guarantees or additional security in some cases, particularly for newer investors.
Experienced landlords with limited company structures and professionally managed portfolios are usually seen more favourably, and may access better terms.
Risks to Consider
As with any financial product, there are risks involved in securing multiple properties under one lending agreement. Understanding these risks is essential for responsible borrowing and long-term investment planning.
Potential risks include:
Cross-default risk: If one property experiences issues (e.g. long-term vacancy or structural damage), it could jeopardise the entire facility.
Interest rate changes: If you're on a variable rate, market fluctuations could impact your monthly repayments.
Portfolio concentration: Overexposure to a single location or tenant type could increase risk in the event of market changes.
As your entire portfolio acts as security, it’s important to have a robust income and contingency plan in place — especially in uncertain markets or when refinancing.
Fees and Charges
As with most commercial mortgages, portfolio lending includes a number of upfront and ongoing costs that should be factored into your cash flow projections.
Typical fees include:
Arrangement fees: Usually 1–2% of the total loan.
Valuation fees: Required for each property, or sometimes a bulk valuation if agreed with the lender.
Legal costs: For both borrower and lender representation.
Exit or early repayment charges: May apply if you settle the loan before the end of the agreed term.
While these fees may seem high initially, the savings from consolidating multiple mortgages can often outweigh the setup costs in the long term.
Tax Considerations
Efficient tax planning is essential when managing commercial property portfolios — especially when finance is involved. Speak with a qualified accountant or tax adviser to ensure you’re managing your investment in the most tax-efficient structure.
Key considerations include:
Rental income tax: Rental income is subject to Corporation Tax or Income Tax depending on your structure.
Mortgage interest relief: Deductibility varies based on ownership (individual vs company).
Stamp Duty Land Tax (SDLT): Payable on any additional property acquisitions.
Capital Gains Tax (CGT): Applies when you sell properties that have increased in value.
Operating through a limited company is a common structure for many landlords, offering benefits in terms of tax treatment and reinvestment of profits.
